Digg is dead. Digg’s failure was a chance for bloggers to speculate about Digg itself and what makes startups fail and rise up.

There were the usual condescending views on what happened to Digg. See picture below.

In case you did not get the joke, here is the actual cover published many years ago.

There were positive takes too, for example here is one from Sarah Lacy:

The lesson from Digg is crucial as Silicon Valley’s ecosystem has made it easier and easier to start a company. It’s that a great product is necessary but not nearly enough. Building a real company is harder, and it takes execution and leadership.

And Sarah ends the article with this:

There will be haters on this post. And that’s fine. But the people who write checks in the Valley have respect for what Digg built, whether the founders fell short or not. Smart people will always want to back these guys– as Mike Maples said on Ask a VC last week– and people like Arrington and me will root for them again.

Context of Failure

In my understanding there is a specific context in which the sentiment “failure is acceptable” occurs. This context is driven by three factors.

First, the economic drivers of society have changed from being manufacturing oriented to one driven by information and software. Software products are not typically capital intensive, besides Moore’s Law ensures more CPU power being available for less cost. So software companies are born, grow and mature at a much faster rate than those that manufacture things.

Second, most major economies are globalized, coupled with spread of internet and internet based services makes an unimaginable amount of competition possible. The key here is that location is not an impediment to build and sell software. As long as connectivity exists, any service can theoretically be served anywhere. Theoretically because there are laws around what can be sold from and to in each nation. But in principle location is not a hard barrier for digital services.

Third, increasing complexity of societies driven by change in demographics of nations, the migration from rural areas into cities, availability of cheap communication devices, affordable internet connectivity and other factors drive an inordinate rate of change and new perspectives that leave little room for certainty.

Consequence

With the above three factors influencing our context, it is easy to work out why investors and entrepreneurs take the stance that “failure is acceptable“. Basically very few have any certainty on what product or service will succeed in the marketplace. A product that succeeds in the US, does not even start in Brazil or India or China. There are no clear answers.

The option to not failing seems to be to sit tight, which certainly is no option for dreamers and builders. Besides in software related services the life-span of vetting a product is quite short. Unlike manufacturing a car where it takes a few years to build one and then test to see if it succeeds, a prototype software product can be done in as few as handful of weeks to get feedback from potential customers.

So a couple of years spent building a software product that has failed is no big deal, the experience of having executed idea still remains valuable. These lessons learnt from failure and the endurance built up in execution can be reused. The VCs and entrepreneurs have thought through these dynamics, leading to insight that failure does not kill and one can always try again.

Bottom line, execution builds competency regardless of outcome.

Is it just a fashion?

I also think, this is no ephemeral trend..this is a deeper perspective of what makes work essential to us as humans. Beyond its ability to put food on the table, work infuses meaning to many of us and without that ability to leave markers around many would be unhappy. But here I digress into philosophical territory and will have to stop I guess! What do you think? What makes failure acceptable, at least in the technology industry?

Fred Wilson of A VC captures the details of being in a trough after the initial high of launching a product. I quote a pertinent passage below.

The ugly adolescent stage is when you’ve built the product and are now building the business. It is when the team grows beyond the intial founding group and not everyone is getting along so well. It is when you are no longer that "bright shiny thing" that everyone wants to talk about. It is when your users are complaining that the service is not reliable or they hate that new feature or interface. It is when you have to figure out how to make money and get profitable. It is when the founder starts to wonder whether this CEO thing is for him or her. It is when you need that next round of financing and it isn’t so easy to raise this time.

Having conceived and launched a product this year I can utterly vouch for the generalities and specifics of what Fred mentions in the post.

Of course I have done this within the framework of the current firm I work for but it does not change the messiness in any fashion. In fact, if anything, it only gets more difficult because not only are you dealing with external competitors, enterprise customers with their glacial decision making speeds, looking for people who have the rigor to build a product but also have to deal with internal politics and organizational bureaucracy. And that can severely test anybody.

So far I have lacked a framework to understand what the heck is happening in my own context. Fred’s post has helped clarify that this is just another phase that has to be overcome and others before me have done the same.